Payday loans can be used to bridge the gap or cover unexpected expenses. The loan is usually due by the borrower on his next payday. They also have high fees and rates. Both traditional payday and 24-hour loans are common payday loan types. We will look at the differences between these two types of loans.
Table of Contents
What is Traditional Payday Lending?
The borrower must repay the loan on his next payday. Storefront lenders typically offer traditional payday loans, but online lenders may do so. A traditional payday loan application usually involves submitting proof of income to the lender, such as a paycheck stub. You will also need a post-dated cheque for the full amount of the payday loan plus interest, fees, and other charges.
Typical payday loans come with high-interest rates and fees. The interest rate for payday loans is usually 400 percent or higher. If borrowers can’t repay the payday loan on time, they may face additional fees, interest, and penalties.
What are 24-Hour Cash Advance Loans?
This type of payday loan can be funded and approved within 24 hours. Online lenders usually offer them. Automated processes are used to review, approve and process loan applications. The application process for 24 hour payday loans resembles that of traditional loans. But the approval process is quicker.
Online applications and approval for 24-hour loans are common. The funds usually arrive in the borrower’s account within 24 hrs, though some lenders provide same-day funding.
The interest rates, fees, and charges for 24-hour payday loans are identical to those of traditional loans. Some lenders will offer a more flexible repayment schedule for 24-hour payday loans.
Differences between Traditional Payday and 24-Hour Cash Advances
There are a few differences between traditional payday advances and 24-hour payday loans:
- Application Process: The standard payday loan application provides proof of income and a post-dated bank check. The approval procedure can take a few days. Online payday loans typically require a short application. Faster approval and funding are available in 24 hours.
- Funding: With traditional payday loans, the borrower could have to await several days before receiving the funds. With a 24-hour payday loan, the funds will be deposited to the borrower’s bank account typically within 24 hours.
- Repayment Terms: Some creditors may offer more flexible repayment options for 24-hour cash advances, such as longer repayment terms or the possibility of making smaller installments over time. Traditional payday loans typically are due on your next paycheck, making it difficult to repay the loan if you’re already struggling.
- Online lenders: Online lenders provide 24-hour payday advances, while storefront lenders generally offer traditional payday advance loans. This makes 24-hour payday loans available to borrowers that do not have the option of traditional payday lenders.
Conclusion
Both 24-hour and traditional payday loans are short-term, high-interest loans. 24-hour payday loans have faster funding approvals, whereas traditional paydays may offer more flexible payment terms. Before accepting any payday loan, you should review all terms and requirements. Also, consider alternatives before taking out the loan. With careful research and consideration, you can choose the most appropriate option for your particular needs and financial circumstances.